Is Your Crypto Money?

Carlos Tapang
Published in
5 min readMar 21, 2022


Is your crypto money? Can you measure its “moneyness”?

There’s no question the U.S. Dollar is money. In fact, it is the standard by which all other currencies can be compared to for moneyness.

What about your crypto? If you own BTC, you may believe it is money, but its moneyness is relative. Compared to the number two crypto (ETH), it is less money-like; but compared to a new crypto like Velas VLX, BTC is more money-like. How can we measure “moneyness”?

Velocity of Money

There is such a measure of money called “velocity”: the number of times a unit of money changes hands within an interval of time (a day, a week, a month, or a year).

Velocity is fundamental to money (media of exchange): if an asset doesn’t change hands, then by definition it is not a medium of exchange. Money becomes money by virtue of it being used to buy and sell stuff. The more something is used to buy and sell stuff, the more it becomes money. If velocity = 0 (technically, this should be called “speed” because it is a scalar measure) for a certain asset, it means nobody is using it for exchange and therefore it cannot be called “money”. If velocity > 0, an asset can be called money to the extent that it is greater than zero.

There is no absolute measure of velocity below which we can say something is not money and above which something is money. When comparing two assets according the their respective velocities, we can only say that one is more “money-like” than the other. In crypto exchanges, for example, we can say that USDT or USDC is more money-like than either BTC or ETH (at least within the confines of exchanges) because these dollarcoins are involved in more transactions than both BTC and ETH combined, in a single day. We can only rank cryptocurrencies according to their “moneyness”:

Single-day velocities on a slow day, 3/20/2022 (24H volume / market cap, in $billions)

(BTC may rank lowest in the above comparisons, but that’s only because the above measure ignores transactions that happen in the Lightning network.)

Incidentally, the Terra stablecoin UST has a velocity of only 0.029 and therefore ranks above BTC but below ETH in terms of moneyness. However, CoinGecko counts transactions that occur only in exchanges (both CEX and DEX); it doesn’t count all transactions that occur in the Terra blockchain.

At any rate, I think we can fairly conclude, using velocity as a moneyness measure, that stablecoins in general are more money-like than volatile cryptocurrencies.

Credit Cards Account for USD High Velocity

While crypto exchanges (both centralized and decentralized) account for most of the crypto transactions, the largest number of USD transactions occur in credit card networks.

Credit and debit cards charge fees that are felt either on the accept-side, or on the spend side. As a consumer, unless the vendor shows it to you being added to the cost of buying something, you don’t feel the pain of the card fee. Consumers normally don’t feel the pain; therefore, there is no incentive for the spend side to use one card or the other. Vendors, on the other hand, pay the fees and are therefore sensitive to transaction fees; but as long as these transaction fees are low enough for any vendor, compared to how many customers she can refuse without losing money, then a certain level of transaction fees do work. This affords card companies to profit from card fees and contributes greatly to USD velocity.

For stablecoins, however, every transaction is “neutral” in that both the accept-side and spend-side are incentivized equally. Card companies are middlemen who are not necessary in the crypto world. With reduced transaction fees for both accept-side and spend-side, stablecoins have the potential to become even more money-like than fiat. Note, however, that not all blockchain networks are the same: stablecoins that exist only in Ethereum, for example, have less chance of becoming money-like than those that exist in Solana. That’s because transaction fees in Ethereum are thousands of times more expensive than transaction fees in Solana.

How could BTC have Highest Value and not be Money-like?

(This was a great question by Francis Kräbbe of At first, I answered this question without even thinking. My grossly wrong answer was that velocity was inversely proportional to value because it’s in the denominator of the formula. The fact is that the value (price per unit) is in both the numerator and denominator and so it’s not even a factor. Velocity is independent of per-unit value.

Velocity is the V in the monetary economic equation of exchange:


Which states that the quantity of money in circulation (M) multiplied by velocity (V) is equal to the level of prices expressed in units of that money (P) multiplied by a vectorized quantity of goods traded (Q). PQ is a summation of products of a very long series of quantities (q sub i) and prices for each (p sub i).

Velocity more precisely is the summation of all transaction values expressed in units of money that occurred in an interval of time, divided by the quantity of money in circulation. The summation of all transaction values in both CoinGecko and CoinMarketCap is just the daily trade volume, which is expressed in USD. In other words, each term in this summation is the USD price of the crypto in question multiplied by the quantity of that crypto involved in that transaction (each term in the summation). This summation is then divided by the overall quantity of that crypto multiplied by its price in USD. The price in USD cancels out and so the velocity is really

V = (Sum of all units in all transactions that occurred in a day) / (quantity in circulation)

Which is independent of the per-unit value of the crypto (or price in USD).

So is Your Crypto Money?

Search your crypto in CoinGecko or CoinMarketCap and divide its 24H volume by its market cap. The number you get is a measure of your crypto’s moneyness: the larger this number, the more money-like your crypto is. Surprisingly, both CoinGecko and CoinMarketCap do have the measure, but they don’t call it “Velocity”. It’s simply “Volume / Market Cap”:

In CoinGecko, velocity is in the details page for each crypto, in the “Price Statistics” section. It is simply named “Volume / Market Cap”.

Note, however that the measure of moneyness you can get from CoinGecko and CoinMarketCap is limited to CEX and DEX environments. It does not include everything that is recorded in blockchains. A more accurate measure of BTC velocity would include not only utx0 numbers from the Bitcon blockchain but also the sum of all transaction sizes in the Lightning network, that occur within a time interval. For stablecoins like USDT and USDC, it should include the sum of all transaction sizes that occur within an interval of time in ALL blockchains in which each of these two largest stablecoins exist. These numbers divided by the total count of coins in circulation would give you a more accurate measure of velocity.



Carlos Tapang

Programmer and Entrepreneur, founder and CEO of RockStable, purveyors of ROKS, the stablecoin designed for daily use, like cash.